The Wealth of Nations_ Books 4-5 - Adam Smith [13]
In that part, however, which explains the different effect of different employments of capital… I will beg to arrest your steps for a moment, while we examine the ground whereon we tread: and the more so, as I find these propositions used in the second part of your work as data; whence you endeavour to prove, that the monopoly of the colony trade is a disadvantageous institution.90
The Colonial Relationship with America
Smith spent the winter of 1766 in London, where he was consulted by Charles Townshend and also made corrections to the third edition of The Theory of Moral Sentiments. By the spring of 1767 he was back in Kirkcaldy to begin a stay of some six years. It was during this period that he struggled to complete The Wealth of Nations, but by 1773 he was ready to return to London, leaving his friends, notably David Hume, under the impression that completion was imminent. As matters turned out, it took Smith almost three more years to complete his study; a delay which may have been due to his increasing interest in the American question. Hume wrote in February 1776 to complain, ‘By all accounts, your book has been printed long ago; yet it has never yet been so much as advertised. What is the reason? If you wait till the fate of America be decided, you may wait long.’91But the reason for the delay in completion may be simple. Smith may well have perceived that the growing conflict with the colonies possibly revealed a fundamental flaw in mercantilist strategy in the context of an association which had brought the system a degree of ‘splendour and glory which it could never otherwise have attained to’.92
As ‘defence… is of much more importance than opulence, the act of navigation is, perhaps, the wisest of all the commercial regulations of England.’93But in describing the objectives of colonial policy, Smith concentrated mainly on its economic aspects, and duly reported on the extensive range of restrictions which Britain had imposed on trade and manufactures, domestic as well as American. To begin with, the Navigation Acts required trade between the colonies and Great Britain to be carried on in British ships, while certain classes of commodities were to be confined initially to the market of the mother country. The so-called ‘enumerated’ goods were of two types: those that were either the peculiar produce of America or were not produced in Britain; and those that were produced in Britain but in insufficient quantities to meet domestic demand. Examples of the first type were sugar, coffee and tobacco; of the second, naval stores, masts, pig iron and copper.
The first broad category of goods could not harm British industry, and here the object of policy, as reported by Smith, was to ensure that British merchants could buy cheaper in the colonies with a view to supplying other countries at higher prices and at the same time establishing a useful carrying trade. In the second case the objectives were to ensure essential supplies and, through the careful use of duties, to discourage imports from other countries with which the balance of trade was supposed to be unfavourable.
Smith also took notice of another feature of British policy, namely that the production